Organizational Theory PPT (Final)

ORGANIZATIONAL
THEORY
Claris Aiza Blanco
Flora Vic Gemina
Ruth D. Jativa
Charlene Prado
Josie Amor Tagalog
Sheena Vasques

INTRODUCTION TO
ORGANIZATIONAL
THEORY /CLASSICAL
THEORY
RUTH D. JATIVA
Presentor
OBJECTIVES:
Learn about:
Organizational Theory
Classical /Neoclassical Theory
System Organic/Contingency Theory
Economic Organization Theory
Power and Politics Theory
Organizational Culture Theory
Institutional Theory
INTRODUCTION 4
Organizational theory is defined as the

sociological study of the structures and
operations of social organizations, including
companies and bureaucratic institutions.
This includes the analysis of the productivity

and performance of organizations and the
actions of the employees and groups within
them. Indeed Editorial Team (2021).
PRIMARY GOALS
 To understand the dynamics of a
successful business
 evaluate the importance of the
professional and social relationships
among employees and structures
between business leaders and their staff
 encourage productivity in the workplace
FORMAL AND NON-FORMAL
ORGANIZATION
Formal organizations are

oriented toward reaching specific
goals.
Informal organizations are
more oriented toward human
psychological needs.
FORMAL AND NON-FORMAL
ORGANIZATION
-more structured and rely on authority based upon
chains of command.
-have clear hierarchies of leadership
-hierarchies
and power relationships are clearly
documented
-Authority is appointed from upper levels of
the hierarchy, such as management
ÌNFORMAL
ORGANIZATION
informal organizations typically do not follow
hierarchies for authority.
less emphasis on established authorities or multiple
levels of hierarchy.
authority is equal among all members
often are not very structured because their goals might
be temporary or entirely social.
Influence
Formal organizations rely on status through

predetermined authority roles for influence.
Members of a formal organization look to
leadership roles to provide guidance. There is a
clear flow of influence through a formal
organization. For example, a subordinate
employee would not hold the same influence as a
manager within a company.
Informal organizations tend to have more
understated norms that are expressed through
customs, morals or beliefs that are often not
written. Members are not pressured to perform
by superiors. Members of an informal
organization mostly have equal influence. For
example, a volunteer group might rotate
leadership among members on an ad hoc
basis. Hashaw (2019).
Members
Formal organizations possess involved rules and laws

regarding behavior and the outcomes of labor. There
are also processes in place for hiring, firing, and
replacing members. Expectations for each member
are outlined and documented. A job description is an
example of a formal document describing the specific
requirements for the members of a formal
organization.
Informal organizations provide
psychological or social benefits for
members. Relationships among members
are more personal than role-related.
Behavior is determined by group consensus.
For example, social groups will follow
norms that are not explicitly written.
Communications
Formal organizations may have rules regarding

the flow of information and communication. The
chain of command will determine how members
communicate. Communication flow is determined
by hierarchy. Often, information flows from
leadership down to other members.
Informal organizations do not have
specific guidelines for
communication. All members are
able to interact with each other
without considering hierarchy.
Members of informal organizations
communicate freely with one
another.
Purpose
Formal organizations are formed to serve a
specific purpose or meet set goals. There is a
constitution or plan and extensive guidelines
directing the organization toward its purpose.
Leadership will regularly review how well goals
are being met and plan accordingly. A formal
organization will exist even if specific members
leave the organization.
Informal organizations serve the needs of
individuals and can be created spontaneously with
a purpose that is not well-defined. Goals are not
always clear because informal organizations
primarily serve social requirements for members.
An informal organization might dissolve if certain
members leave the organization
What are the Benefits of Informal and
Formal Organizations?
Formal organizations are useful for reaching
defined goals. The structure of a formal
organization makes it effective for realizing profit
or conducting business. The components and
structure of a formal organization are necessary in
order to efficiently meet stated objectives.
Informal organizations can be more
responsive to change due to the lack of rigid
structure. They are inherently more oriented
around people rather than outcomes. An
example would be a company softball team
that allows employees to interact socially
away from the formal hierarchies in order to
build morale.
CLASSICAL THEORY 19
• Definition: Classical Theory is the traditional theory,

wherein more emphasis is on the organization rather than
the employees working therein. According to classical
theory, the organization is considered a machine, and the
human beings as different components/parts of that
machine. ‌Business Jargons. (2016).
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-discusses how to divide up professional tasks in

the most efficient and effective way.
-pay particular attention to the professional dynamics
and relationships within an organization and how these
relationships may impact the company's function and
production.
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-to help businesses create the most beneficial

structures within a company that can then help the
organization accomplish its goals. Indeed Editorial Team
(2021).
THE FOUR PRINCIPLES OF THE 22
CLASSICAL THEORY
1. Division of labor: This principle argues that the

production of a commodity splits into various divisions
of manufacturing, and the people work within each
division according to their area of specialization.
CLASSICAL THEORY
2.Scalar and functional processes: The
scalar process deals with a company's vertical growth,
meaning the relationships between business leaders and
their employees.
- means that professionals in management instruct their

employees, and employees carry out the actions.
CLASSICAL THEORY
3. Structure: The principle of structure

describes patterns of professional behavior that
lead to the accomplishment of the
organization's goals.
-a tool that may facilitate relationships between

all aspects of the company or business.
CLASSICAL THEORY
4. Span of Control: this means attributing the
appropriate numbers of employees to a
supervisor so they can implement the principles
of coordination, planning, motivation, and
leadership.
- It is about assigning the maximum number of
employees to a manager while also allowing them

enough time and support to lead their staff.
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NEO-CLASSICAL THEORY/MODERN THEORY
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• CHARLENE PRADO
• Presentor
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• Definition: The NeoClassical Theory is the

extended version of the classical theory
wherein the behavioral sciences get
included in the management. According to
this theory, the organization is the social
system, and its performance does get
affected by human actions. Business Jargons. (2016).
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The neoclassical theory was an attempt at

incorporating the behavioral sciences into
management thought in order to solve the
problems caused by classical theory practices.
The premise of this inclusion was based on the
idea that the role of management is to use
employees to get things done in organizations.
NEO-CLASSICAL THEORY 30
-concentrated on answering questions related to the

best way to motivate, structure, and support
employees within the organization.
-focuseson the emotional and psychological

components of peoples' behavior in an
organization.
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This theory argues that a sense of belonging and social

acceptance is an important aspect of positive
performance in the workplace.
-means that effective leaders understand how the group

dynamics may contribute to the success of the
organization overall.
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EFFECTIVE GROUP DYNAMICS
Group dynamics can play a significant role in how

individuals perform their jobs or meet goals. The
concept examines how different personalities,
behaviors or attitudes interact with one another.
When you understand the core elements of group
dynamics, you can help ensure your projects or tasks
run more smoothly.
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GROUP VS. TEAM
• Group: A group is a collection of independent

people with separate priorities united by their
shared interests or experiences.
• Team: A team is a collection of interdependent

people brought together by a shared goal. Like
members of groups, members of teams also
have something in common, such as interests or
experiences.
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GROUP DYNAMIC
• describes how individuals behave within a system
• involves understanding that group dynamics is a

more complex process than just summing up the
individual characteristics of each group member.
• and it answers how each group member's actions affect

the group, and how these group interactions affect each
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-alsocalled modern organizational theory, includes

multiple management development approaches.
-considers interactions between people within an

organization and the surrounding environment,
as well as the interpersonal interactions between
members of the organization.
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• an essential factor in group dynamics is the

-
concept of cohesiveness. Better cohesion, or

unity among members, makes it easier to
accomplish tasks.
• Establishing common interests and values, along
with agreeing on their goals and processes to
achieve the significant task.
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MODERN
MANAGEMENT
THEORY
Presentation title 38
MODERN MANAGEMENT THEORY

• Modern management theory adopts an approach to
management that balances scientific methodology
with humanistic psychology. It uses emerging
technologies and statistical analysis to make
decisions, streamline operations and quantify
performance. ‌Villanovau.com. (2022).
3. Modern theory
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Theorists based this approach on systems analysis and

used both quantitative and behavioral sciences to
develop it. This means that professional leaders who
adopt this theory may use statistical and mathematical
information to make business decisions while also
considering the satisfaction and happiness of their
employees.
BENEFITS OF THE MODERN
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THEORY OF MANAGEMENT
1.Boosts productivity: Modern management theory
uses mathematical and statistical methods to assess
performance within an organization.
2.Aids decision-making: Modern management

theories often provide managers insights into the
factors they need to examine, which they can use to
evaluate their organization or department.
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3.Improves employee engagement: As mentioned,
the modern management theory examines employees'
motivation for working beyond financial gain.
-identify and implement processes or procedures that

consider employees’ varying needs.
- employees feel satisfied at work, it can boost their morale

and engagement and make them want to continue working for
the organization.
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4.Promotes objectivity: Modern management

theory emphasizes the use of mathematical
techniques. These techniques allow managers to
make decisions based on data and evidence
rather than personal opinions or feelings.
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5.Enables adaptability: Modern management theory
recognizes that today's organizations often exist
within rapidly changing environments.
This theory emphasizes the importance of

recognizing the influence of internal and external
factors on business and encourages managers to use
several techniques and approaches to work with
them.
SYSTEM/ORGANIC/
CONTINGENCY THEORY
FLORA VIC GEMINA

Presentor
SYSTEMS MANAGEMENT
45
THEORY
Systems management offers an alternative
approach to the planning and management of
organizations. The systems management theory
proposes that businesses, like the human body,
consists of multiple components that work
harmoniously so that the larger system can
function optimally. CFI Team (2022).
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-Employees are one of the most important

components of a company. Other elements
crucial to the success of a business are
departments, workgroups, and business
units
-managers are required to evaluate patterns
and events in their companies so as to
determine the best management approach
CONTINGENCY THEORY
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Contingency theory- also called decision

theory, views organizations as a structure
composed of choice-makers, and argues
that there is no one right way to make a
decision.
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Contingency theory- also called decision

theory, views organizations as a structure
composed of choice-makers, and argues that
there is no one right way to make a
decision.
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Herbert A. Simon, a primary contributor to this

theory, found that while people make business
decisions at all levels of an organization,
employees working at higher levels make the most
valuable or impactful choices.
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This theory argues that the ideal decision or choice

may differ from one organization to another, so
choices are dependent on various internal and
external factors. This means that the success of a
business is contingent on the decisions made by the
organization's leaders.
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Contingency theorists believe that

management is responsible for analyzing
business situations and then acting
accordingly to address any issues or
challenges.
CONTINGENCY THEORY OF 52
LEADERSHIP IN THE WORKPLACE

In the workplace, there are dozens of factors
that can affect a leader’s effectiveness. These
include things like the size of the team, the
scope of a project and the expected delivery
date for a result.
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The contingency theory of leadership is impacted by a range of specific

factors in the average workplace, including:
The maturity level of the employees

Relationships between coworkers
Work pace
Management style
Typical work schedule
Goals and objectives
Standards for behavior
Company Policies
Employees’ work styles
Employees’ morale
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3 different models for contingency leadership.
1. Fiedler Model
Therefore, if a leader’s style is not a good fit for a
particular situation, they will need to be replaced by a
different leader. To apply Fiedler’s theory, you have to
determine your leadership style and your situation’s
favorableness using Fiedler’s model.
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Leadership style
The first step is to use a scale called the
Preferred Coworker scale. To use this scale,
you must think of a team member you did not
or do not enjoy working with.
CONTINGENCY THEORY OF 56
LEADERSHIP IN THE WORKPLACE

Example:
Unfriendly 1 2 3 4 5 6 7 8 Friendly
Unpleasan
1 2 3 4 5 6 7 8 Pleasant
t
Rejecting 1 2 3 4 5 6 7 8 Accepting
Tense 1 2 3 4 5 6 7 8 Relaxed
Cold 1 2 3 4 5 6 7 8 Warm
Boring 1 2 3 4 5 6 7 8 Interesting
Hostile 1 2 3 4 5 6 7 8 Supportive
Guarded 1 2 3 4 5 6 7 8 Open
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a high score would make you a Highly Preferred

Coworker leader. HPC leaders are relationship-
oriented and focus their energy on building and
maintaining healthy and productive relationships in
the workplace.
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Situational favorableness
The second part of Fiedler’s model is determining situational favorableness.
To do this, you will evaluate three distinct factors:
Leader-Member Relations
This factor involves the amount of trust and confidence that your team
members have in you. If you are trusted and well-liked by your entire team,
your influence will increase and your workplace will become a more
favorable situation.
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Task Structure
This factor relates to whether the tasks your team

completes are clear and structured or vague and
unstructured. Unstructured tasks do not have a well-
specified plan of action and would be considered
unfavorable.
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Leader’s Position Power
This is the amount of power a leader has over their team

and involves whether or not they have the authority to
give out rewards or punishment. Typically, the more
power you have, the more favorable your situation.
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MOTIVATION THEORY
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Motivation theory
The motivational theory includes the study of
what drives and inspires members of an
organization to work toward their professional
goals.
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Theorists who support this approach argue

that employees perform their job duties
accurately and productively when
management knows how to motivate them
correctly.
-leadersto thoroughly understand their employees' 64
behavioral patterns and preferences to recognize

the most beneficial way to support them.
-The goal of this is to increase company

productivity on the basis that appropriately
encourages employees to perform more efficiently,
thus increasing production and profit.
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MASLOW’S HIERARCHY OF NEEDS

• Abraham Maslow is among the most prominent
psychologists of the 20th century and the hierarchy of needs,
accompanied by the pyramid representing how human needs
are ranked, is an image familiar to most business students
and managers. Maslow’s theory is based on a simple
premise: Human beings have needs that are hierarchically
ranked (Maslow, 1943; Maslow, 1954).
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MASLOW’S HIERARCHY OF
NEEDS
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THE MOST BASIC OF MASLOW’S NEEDS

ARE PHYSIOLOGICAL NEEDS.
• Physiological needs refer to the need for air, food,
and water. Imagine being very hungry. At that
point, all your behavior may be directed at finding
food. Once you eat, though, the search for food
ceases and the promise of food no longer serves as
a motivator.
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SAFETY
• Once physiological needs are satisfied, people
tend to become concerned about safety. Are
they safe from danger, pain, or an uncertain
future?
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SOCIAL NEEDS
• refer to the need to bond with other human
beings, to be loved, and to form lasting
attachments. In fact, having no attachments
can negatively affect health and well-being
(Baumeister & Leary, 1995).
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ESTEEM NEEDS
• The satisfaction of social needs
makes esteem needs more salient.
Esteem needs refer to the desire to be
respected by one’s peers, feeling
important, and being appreciated.
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SELF-ACTUALIZATION
• refers to “becoming all you are capable of
becoming.” This need manifests itself by
acquiring new skills, taking on new
challenges, and behaving in a way that will
lead to the satisfaction of one’s life
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OPEN SYSTEMS THEORY
Sheena Vasques
Presentor
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Open systems theory

Open systems theory is a concept that argues that
an organization's environment influences it, and
understanding the impact of this influence may
help managers develop more effective leadership
strategies. Theorists categorize the environmental
factors that impact an organization as specific or
general.
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External Environment Factors
External environment factors are elements that exist outside of a

company's internal environment that can affect a company's
operations. These outside forces can help the business or present
challenges to its current processes. Managers often keep track of
external environmental factors so they can recognize and
resolve the issues the factors cause and make appropriate
changes.
Why are external environmental factors
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important?
External environment factors are important because
they can cause direct and indirect effects on business
operations, personnel and revenue. The external
environment of a company changes constantly in ways
beyond the company's control, but executives and
managers can track these changes and minimize their
consequences.
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External Environment Factors
Technological factors
-technology continues to advance, and companies can

benefit from these breakthroughs or face challenges in
competing with them.
-- use modernized methods to collect information data
external environment factors 77
Economic factors
The state of the economy plays an important role in every aspect of daily life
from the well-being of personnel to the ability of a company to thrive.
-When the economy trends downward and unemployment rises, businesses

may have to work harder to keep their staff and change their processes to
continue earning revenue.
If the company produces products for retail sale, for instance, it may consider
lowering the price to increase sales and positively affect its revenue.
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Policies that can have long-term

effects on companies include:
Taxation
Tariffs
Employment law
Competition regulation
Import restrictions
Intellectual property law
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Demographic factors
Companies with successful products and services evaluate
the demographics of their target market to ensure they meet
the needs of those who benefit from their offerings. They
also perform tests to measure how well they serve their
customers. This helps them understand if their target
market has changed and how they can develop better ways
to serve their loyal customers and earn new ones.
Social factors 80
Businesses take social factors into

consideration when developing and
marketing products, and many use
current events, movements, and social
issues to appeal to their customers.
Competitive factors
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Businesses can increase their market share and stay

relevant to their customers by keeping track of their
competitors. They can identify and evaluate successes and
challenges, thus learning what to incorporate into their
own processes and how to prevent revenue loss. They can
also use the information they gather to develop ideas for
product changes, product relaunches, and new product
development.
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Global factors
Executives have a duty to keep track of both domestic and global
issues, especially if they conduct business internationally. By
learning about social issues that affect those in other countries
and their cultural norms, consumer trends, and economic status,
company leaders can provide their teams with relevant training.
This enables them to develop products or offer services that meet
the needs of international customers by providing solutions to
challenges they face as consumers.
Ethical factors 83
Because each individual has a distinct concept of

ethics and morality, some companies may find it
challenging to balance the personal lives of staff
members with their expectations in the workplace.
Employees' leisure activities, such as social media
accounts, can reflect on their employer. As
representatives of the company, they have a
responsibility to avoid behavior that could
negatively affect the business.
Natural factors 84
As environmental awareness continues to grow, more

consumers have realized the effects of business
processes on the planet. Some consumers have used
their purchases to support companies that develop
ecologically friendly practices, such as using
compostable packaging and solar energy. By paying
attention to these external concerns and changing their
operations, businesses can make changes that help them
protect the environment, retain customers and increase
revenue.
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Economic Conditions:
The geographic location of a business can have a great
impact on the company's ability to grow and remain
successful because of local economic trends and
events, including recessions and economic upswings.
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Cultural Values: The cultural values of a

community can influence customers' viewpoints and
standards. This may influence whether they support
your business or organization, and business leaders
may use this theory to adapt to local cultural ethics.
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Education systems: Areas with

strong education systems may be ideal for
businesses that are in the technology industry or
other companies that may rely on employees
with extensive academic training.
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external environment factors
Legal consideration: The legal and political

environment, including the taxes and regulations on
business operations, may impact the stability and
security of an organization. This may influence its
ability to remain productive and successful.
ECONOMIC THEORIES
ECONOMIC ORGANIZATION
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THEORIES
Economic Organization Theories is the mix of
economy and organization theories (Also called
as Transaction Cost).İt is the area where studies
conjunct the rational concepts of classical
theories, ecological approach, and the economic
perspectives of the organizational structure.
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THEORY OF FIRM
• The theory of the firm consists of a

number of economic theories that
describe the nature of the firm,
company or corporation including its
existence, behavior, structure, and
relationship to the market (Demetri,
2007)
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THEORY OF FIRM
• In simplified terms, the theory of the firm aims to
answer these questions:
• Existence – why do firms emerge, why are not all
transactions in the economy mediated over the
market?
• Boundaries – why is the boundary between firms and
the market located exactly there as to size and output
variety?
• Which transactions are performed internally, and which
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THEORY OF FIRM
• Organization – why are firms structured in such a
specific way, for example as to hierarchy or
decentralization?
• What is the interplay of formal and informal
relationships?
• Heterogeneity of firm actions/performances – what
drives different actions and performances of firms?
• Firms exist as an alternative system to the market-price
mechanism when it is more efficient to produce in a
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MANAGERIAL ECONOMICS
• Managerial Economics is a science dealing with the effective
use of scarce resources.
• It guides the managers in taking decisions relating to the firm’s
customers, competitors, and suppliers as well as relating to the
internal functioning of a firm.
• It makes use of statistical and analytical tools to assess
economic theories in solving practical business problems.
Juneja, P. (2015).
AGENCY THEORY
• Agency theory refers to a contract in which one
party is designated as the principal, and the
other, as the agent.
• The agent contracts to carry out certain activities
for the principal, and the principal contracts to
reward the agent accordingly
AGENCY THEORY 96
• Three assumptions are at the core of agency

theory:
• Common to most economists: individuals
maximize their own self-interest.
• social life is a series of contracts, or
exchanges, governed by competitive self-
interest.
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Transaction Cost Theory

• Transaction costs: the costs of negotiating,
monitoring, and governing exchanges between
people transaction cost theory:
• a theory that states that the goal of an
organization is to minimize the costs of
exchanging resources in the environment and
• the costs of managing exchanges inside the
organization
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OLIVER WILLIAMSON
• has big influence on the development of this
theory.
• He accepts this approach as an open system and
mostly focuses on the process of the output
production and service that is exchanged by the
people outside of the system rather than the
technology and production system of the
organization.
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TRANSACTION COST THE MAIN

THEME OF THIS APPROACH:
• Organizations try to organize the change in
their products and services in the most
economic way.
• it is influenced by the bounded rationality of
the decision-makers and on the other side
influenced by the self-benefit behaviors of
the people involved in change.
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• According to Williamson this approach can

be used in the same field with complex
disciplines such as,
• strategic management.
• Why? Because the economy is one of the
best strategies.
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TRANSACTION COST THEORY

• the model shows institutions and markets as
possible forms of organization to coordinate
economic transactions.
• When the external transaction costs are higher
than the internal transaction costs, the company
will grow.
• If the external transaction costs are lower than
the internal transaction costs the company will be
downsized by outsourcing,
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• Managerial economics uses both Economic theory
as well as Econometrics for rational managerial
decision making.
• Econometrics is defined as use of statistical tools
for assessing economic theories by empirically
measuring relationship between economic
variables. It uses factual data for solution of
economic problems.
MANAGERIAL ECONOMICS IS ASSOCIATED WITH 103
THE ECONOMIC THEORY WHICH CONSTITUTES

The theory of a firm states“THEORY OFaim
that the primary FIRM”
of the firm is to maximize
wealth. Decision-making in managerial economics generally involves the
 establishment of a firm’s objectives,
 identification of problems involved in the achievement of those
objectives,
 development of various alternative solutions,
 selection of the best alternative, and finally implementation of the
decision.
104
CORRELATES TO MANAGERIAL
DECISION-MAKING.
105
THE FACT OF SCARCITY OF

RESOURCES GIVES RISE TO THREE
FUNDAMENTAL QUESTIONS
a.What to produce?
b.How to produce?
c.For whom to produce ?
WHAT GOODS AND SERVICES SHOULD BE 106
PRODUCED AND IN WHAT AMOUNT/QUANTITIES?
• The managers use demand theory for deciding this.

• The demand theory examines consumer behavior with respect to the kind
of purchases they would like to make currently and in the future;
• the factors influencing the purchase and consumption of a specific good
or service;
• the impact of change in these factors on the demand for that specific good
or service;
• and the goods or services which consumers might not purchase and
consume in the future.
• Employees should be managed properly and 107
motivated by providing the best remuneration and

compensation per industry standards.
• It is an organized practice that involves balancing

the work-employee relation by providing monetary
and non-monetary benefits to employees.
• It is an integral part of human resource

management which helps in motivating employees
and improving organizational effectiveness.
HOW TO PRODUCE GOODS AND 108
SERVICES.
• It has to make decisions regarding the purchase of
raw materials, capital equipment, manpower, etc.
• The managers can use various managerial
economics tools such as production and cost
analysis (for hiring and acquiring inputs),
• Project appraisal methods( for long-term
investment decisions), etc for making these crucial
decisions.
WHO SHOULD CONSUME AND CLAIM 109
THE GOODS AND SERVICES

• The firm, for instance, must decide which is
it’s niche market-domestic or foreign?
• It must segment the market. It must conduct a
thorough analysis of market structure and
• take price and output decisions depending
upon the type of market.
MANAGERIAL ECONOMICS HELPS IN 110
DECISION-MAKING
• Managerial economics helps in decision-

making as it involves logical thinking.
Moreover, by studying simple models,
managers can deal with more complex and
practical situations. Also, a general approach is
implemented.
MANAGERIAL ECONOMICS TAKE A 111
WIDER PICTURE OF FIRM,

• it deals with questions such as what is a firm, what are
the firm’s objectives, and what forces push the firm
towards profit and away from profit.
• It deals with key issues such as what conditions favor
entry and exit of firms in the market, why are people paid
well in some jobs and not so well in other jobs,
• it is a great rational and analytical tool.
112
• Managerial Economics is not only

applicable to profit-making business
organizations, but also to non-profit
organizations such as hospitals,
schools, government agencies
113
POWER AND POLITICS IN AN

ORGANIZATION
CLARIS AIZA BLANCO

PRESENTOR
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ORGANIZATIONAL CULTURE
Josie Amor Tagalog

Presentor
145
ORGANIZATIONAL CULTURE
Is a system of shared assumptions, values and

beliefs, which governs how people behave in
organizations.
 “the way things are done around here” (Deal &

Kennedy, 2000).
146
WHAT FACTORS AFFECT

ORGANIZATIONAL CULTURE?
• Company Policy
 The organizational practices set up by
senior management can impact the overall
culture of an organization because they
establish the governing principles that
employees follow to perform their jobs.
147
WHAT FACTORS AFFECT

• Company History
 An organization’s background can impact
the type of culture that’s formed in the
workplace. Start-up companies usually
create a different companies usually create
a different environment than an established
corporate firm.
148
WHAT FACTORS AFFECT

• Company Mission
 Company culture is often formed by a
common mission. If a company sets clear
goals that staff members believe in, they are
likely to form a specific environment in the
workplace based on those objectives.
149
WHAT FACTORS AFFECT

• Company History
 An organization’s background can impact
the type of culture that’s formed in the
workplace. Start-up companies usually
create a different companies usually create
a different environment than an established
corporate firm.
150
WHAT FACTORS AFFECT

• Leadership
 The leadership style of an organization’s
management can greatly impact the culture.
It sets the tone for an organization’s values
and interactions within the workplace.
151
WHAT FACTORS AFFECT

• Motivational Tools
 Praise, monetary bonuses or other
incentives can affect the cultural
environment by increasing enthusiasm and
productivity.
152
WHAT FACTORS AFFECT

• Location
 The way an organization operates whether
in a physical building or as a remote
business plays a role in determining the
company culture.
153
WHAT FACTORS AFFECT

• Industry
 The type of business a company engages in
can help determine the culture due to
differing standards and employee skill sets.
154
WHAT FACTORS AFFECT

• Communication
 How ideas are communicated within an
organization has an impact on the way staff
members function within the environment.
Organizations who communicate effectively
are more likely to have a positive work
culture.
155
TYPES OF ORGANIZATIONAL
CULTURE
• Normative
 Norms and procedures of the organization
are predefined and the rules and regulations
are set as per existing guidelines.
156
CULTURE
• Normative
 Norms and procedures of the organization
are predefined and the rules and regulations
are set as per existing guidelines.
157
CULTURE
• Pragmatic
 More emphasis is placed on the clients and
the external parties. The main motive is
customer satisfaction.
158
CULTURE
• Academy Culture
 Organizations hire skilled individuals. Roles
and responsibilities are delegated according
to the back ground, educational qualification
and work experience of the employees.
159
CULTURE
• Baseball Team Culture

 Considers the employees as the most
treasured possession of the organization,
the true assets who have a major role in its
successful functioning.
160
CULTURE
• Club Culture
 Organizations are very particular about the
employees they recruit. The individuals are
hired as per their specialization, educational
qualifications and interests.
161
CULTURE
• Fortress Culture
 The employees are terminated if the
organization is not performing well. Stock
broking follow such culture.
162
CULTURE
• Tough Guy Culture

 Feedbacks are essential. The performance
of the employees are reviewed from time to
time and their work is thoroughly monitored.
163
CULTURE
• Tough Guy Culture

 Feedbacks are essential. The performance
of the employees are reviewed from time to
time and their work is thoroughly monitored.
164
CULTURE
• Process Culture
 Employees adhere to the processes and
procedures of the organization. They abide
by the rules and regulations and work
according to ideologies of the workpace.
165
CULTURE
• Process Culture
 Employees adhere to the processes and
procedures of the organization. They abide
by the rules and regulations and work
according to ideologies of the workpace.
166
IMPORTANCE OF ORGANIZATIONAL
CULTURE
 Decides the way employees interact at their

workplace.
 Creates the brand image of the

organization.
167
IMPORTANCE OF ORGANIZATIONAL
CULTURE
 Unites the employees who are otherwise

form different backgrounds.
 Extracts the best out of each team member

in the organization.
INSTITUTIONAL THEORY 168
• Flora Vic Gemina

Presentor
BACKGROUND ON 169
INSTITUTIONAL THEORY
• Institutional theory was introduced in the
late 1970s by John Meyer and Brian Rowan
as a means to explore further how
organizations fit with, are related to, and
were shaped by their societal, state,
national, and global environments.
WHAT IS AN INSTITUTION? 171
• Institutional theory gives us a way to

understand how organizations might navigate
rules and norms of the system in order to appear
legitimate and survive. Another word for this
system is the institutional environment. When
organizations try make their actions consistent
with the expectations of the institutional
environment, they work toward something
called institutional isomorphism.
INSTITUTIONAL ISOMORPHISM 172
• According to institutional theory

researchers Paul DiMaggio and
Walter Powell, organizations can
achieve institutional isomorphism via
three main avenues:
COERCIVE PROCESS:
173
• Coercive process: organizations adopt

changes consistent with the larger
institution because of pressures from other
organizations upon which they might
depend or by which they might be
regulated, such as state mandates or
supplier demands
174
MIMETIC PROCESSES:
• Mimetic processes: organizations

adopt other organizations' practices
in order to deal with internal
uncertainty about their own actions,
strategy,
175
NORMATIVE PRESSURE
• Normative pressure comes from suppliers,

customers, associations like companies’ trade
unions, the media and other social entities.
Trade unions and other associations are
usually considered the basic entities that
create normative pressures
180
RESOURCE DEPENDENCY,
POPULATION ECOLOGY,
NETWORK
Josie Amor L. Tagalog

Presenter
RESOURCE DEPENDENCE THEORY
Organizations’ ability to acquire and maintain

resources in order to survive.
 Organization must transact with its
environment to get some resources and
support.
POPULATION ECOLOGY
Is the study of dynamic changes (beginning,

end, organizational forms) within a given set of
organizations.
 Hannan & Freeman (1989) believe that long-
term change in the diversity of organizational
forms within a population occurs through
selection rather than adaptation.
NETWORK
A current organizational trend rather than a

“theoretical perspective”. This is a tendency of
companies to join together to share scarce
resources and be more competitive.
184
Wrap
it Up!
 Organizational Theory
 Classical /Neoclassical Theory
 System Organic/Contingency Theory
 Economic Organization Theory
 Power and Politics Theory
 Organizational Culture Theory
 Institutional Theory
 Resource Dependency Theory,
Population Ecology, Network
185
REFERENCES
• Indeed Editorial Team (2021). What Is Organizational Theory? Definition and 6 Types. [online] Indeed Career
Guide. Available at: https://www.indeed.com/career-advice/career-development/what-is-organizational-theory.
• ‌
• Indeed Editorial Team (2020). Understanding the Contingency Theory of Leadership | Indeed.com. [online]
www.indeed.com. Available at: https://www.indeed.com/career-advice/career-development/contingency-theory-
of-leadership.
• ‌
• Indeed (2021). 9 External Environment Factors That Affect Business. [online] Indeed Career Guide. Available at:
https://www.indeed.com/career-advice/career-development/external-environment-factors.
• ‌
• www.youtube.com. (n.d.). Theories of Organization: Classical Organizational Theory and Systems Theory. [online]
Available at: https://www.youtube.com/watch?v=TXDJsnFTCMg&t=210s [Accessed 12 Nov. 2022].
• ‌Business Jargons. (2016). What is Classical Theory? definition and meaning - Business Jargons. [online] Available
at: https://businessjargons.com/classical-theory.html.
186
REFERENCES
• ‌
• Hashaw (2019). What Is the Difference Between an Informal & Formal Organization? [online]
smallbusiness.chron.com. Available at: https://smallbusiness.chron.com/difference-between-informal-formal-
organization-18282.html.
• Business Jargons. (2016). What is NeoClassical Theory? definition and meaning - Business Jargons. [online]
Available at: https://businessjargons.com/neoclassical-theory.html.
• ‌Villanovau.com. (2022). [online] Available at: https://www.villanovau.com/resources/leadership/an-overview-of-
management-theories/#:~:text=out%20of%20them.- [Accessed 12 Nov. 2022].
• ‌CFI Team (2022). Management Theories. [online] Corporate Finance Institute. Available at:
https://corporatefinanceinstitute.com/resources/management/management-theories/.
• ‌Study.com. (2022). [online] Available at: https://study.com/academy/lesson/organic-organizational-structure-
definition-examples-quiz.html#:~:text=According%20to%20Burns%20and%20Stalker.
• Juneja, P. (2015). Managerial Economics - Fundamental and Advanced Concepts. [online]
Managementstudyguide.com. Available at: https://www.managementstudyguide.com/managerial-
economics.htm.
• ‌
187
THANK
YOU!
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ORGANIZATIONAL

Organizational theory is defined as the

This includes the analysis of the productivity

Formal organizations are

Formal organizations rely on status through

Formal organizations possess involved rules and laws

Formal organizations may have rules regarding

• Definition: Classical Theory is the traditional theory,

-discusses how to divide up professional tasks in

-to help businesses create the most beneficial

1. Division of labor: This principle argues that the

- means that professionals in management instruct their

3. Structure: The principle of structure

-a tool that may facilitate relationships between

employees to a manager while also allowing them

• Definition: The NeoClassical Theory is the

The neoclassical theory was an attempt at

-concentrated on answering questions related to the

-focuseson the emotional and psychological

This theory argues that a sense of belonging and social

-means that effective leaders understand how the group

EFFECTIVE GROUP DYNAMICS

Group dynamics can play a significant role in how

GROUP VS. TEAM

• Group: A group is a collection of independent

• Team: A team is a collection of interdependent

• involves understanding that group dynamics is a

• and it answers how each group member's actions affect

-alsocalled modern organizational theory, includes

-considers interactions between people within an

• an essential factor in group dynamics is the

concept of cohesiveness. Better cohesion, or

MODERN MANAGEMENT THEORY

Theorists based this approach on systems analysis and

2.Aids decision-making: Modern management

-identify and implement processes or procedures that

- employees feel satisfied at work, it can boost their morale

4.Promotes objectivity: Modern management

This theory emphasizes the importance of

FLORA VIC GEMINA

-Employees are one of the most important

Contingency theory- also called decision

Contingency theory- also called decision

Herbert A. Simon, a primary contributor to this

This theory argues that the ideal decision or choice

Contingency theorists believe that

LEADERSHIP IN THE WORKPLACE

The contingency theory of leadership is impacted by a range of specific

The maturity level of the employees

3 different models for contingency leadership.

LEADERSHIP IN THE WORKPLACE

a high score would make you a Highly Preferred

This factor relates to whether the tasks your team

Leader’s Position Power

This is the amount of power a leader has over their team

Theorists who support this approach argue

behavioral patterns and preferences to recognize

-The goal of this is to increase company